SSA - $200,000 computer screw-up

Does anybody know why the SSA went $100,000 to $200,000 over budget for a computer system? Did anybody lose their job over this mistake or is the SSA being managed like Enron? Steve Gibson

computer screw-up? Wha ARE you talking about? RE Gaines

In article <C647D30974648817.BEFDFFA8E4614B8B.D19CA2BB6275E9E3

First, I'm told it was $100,000 to $125,000 over budget - about double what was expected.

Second, your Regional Director should know, and will be glad to tell you if you contact him. Give it try; it certainly works with my region's Director.

Third, the article Al referenced (http://www.glider.com/2002 _spring_ssa_board_notes.htm) at the start of this thread also explains what happened.

After you've had a chance to inform yourself, could you come back and tell us if you still think it was an avoidable mistake, and if SSA is being managed like Enron? That is a really gratuitous insult.

I hear the vendor came on the recommendation of the EAA, who as an organization got clipped for even more.

Finding out the actual details about the new computer purchase is not easy.

Before, during and after the SSA convention, I spoke with several officers of the organization. The following is my unerstanding:

The old computer system was sadly outdated and with Y2K coming up it was decided to search for a replacement system.

The full SSA board of directors approved an $85,000 expenditure. I spoke with several directors who had no prior knowledge of the huge final expenditure.

Several well known and highly visable SSA members who are computer experts were never consulted. It is possible others were so consulted.

For many reasons the cost overruns for the new system ran up to 'over' $250,000 however, the SSA made the company make concessions the EAA did not make. The annual cost to keep the system running is $60,000.

It was stated at the SSA Membership meeting the new system will pay for itself in the long run.

For me, the disturbing issue, if true, is a very small group of people were able to make a financial decision that could bankrupt the organization.

Finally, it was admitted, in so many words, if the same scenario were to occur, it would not happen again, and some officers expressed regret for the decisions made.

Bottom line - it was a bad decision, but we need to get on with the business of doing business.

It would be appropriate for the SSA to publish more details.

I intend to publish more information about the SSA convention in my newsletter as this newsgroup format is not one I enjoy. You may subscribe on our web site listed below.

I begin by certifying that I asked three SSA directors about the computer deal prior to and during the SSA convention. All were concerned but they had very little in the way of facts. One opined that he didn't think many on the board understood what happened. That director was not Tom Knauff, although he implies the same thing.

Larry Sanderson, you would do the membership a great service by providing this newsgroup with some additional information. Then, hopefully we can put this behind us. Specifically,

1. What does this computer system do that couldn't be done with custom configured, off the shelf software? I know of a business remarkable similar to the SSA. It's a for-profit with similar revenues. It tracks 11,000 customers, publishes, maintains inventory, and manages large mailings. That business operates with Quick Books Premium (the $500 networked version), $5,000 worth of contact management software, and two computers. I've heard other computer savvy SSA members express similar concern. You could help stop rumors by helping us understand this.

2. What is the yearly cost of maintaining the software? From my experience, 5 to 15% of the original purchase price is typical. Assuming that the original cost was $250,000 this would amount to $12,000 to $37,000. Tom Knauff's report of $60,000/year must be an error, right?

3. Has the board considered dropping the system, or at least, consulting with knowledge individuals about replacing the system? Perhaps a better way of asking this is; When the board approved the annual upkeep for the software did it ignore the original sunk costs. (For those who don't know a 'sunk cost' is a cost incurred in the past that will not be affected by any present or future decision. Sunk costs should be ignored in determining whether a new, or continued investment is worthwhile.)

4. How was the money for the entire system approved? Tom Knauff's post indicates that the entire board originally approved the initial $85,000. When and how were the remaining amounts approved?

This is not just about computers. It's about the SSA's priorities. The SSA spends almost no money or no detectable effort at marketing. Alternative uses of that computer money might have included; funding a full time marketing person, producing several broadcast quality videos for cable, providing FBO's with marketing assistance.. well you get the idea.

Alan Reeter

I would like to point out that the use of Endrun in Pez is not a gratuitous insult but merely a coincidence. Same-o for the reference to QuickBooks. Just luck of the draw.

The truly infuriating thing about this fiasco (which we have all known about for 8 or 9 months) is that the information has NOT been made available. It has been hidden for some reason. And that action has caused distrust. Doesn't everyone know the PR maxim that you reveal it as soon as possible, take the hit, and move on?

I think irreparable damage has been done. Sure, the purchase was dumb and the maintenance contract may be dumber. But the biggest damage is done to trust. When the membership rates are raised, what is that for? To pay for marketing of the sport? Do you believe it is for an increase in phone calls and travel expenses due to the 9/11 crimes? Or do you think it is to pay for this fiasco? I really don't know. I just know that I would not have asked those questions 8 or 9 months ago.

That's human nature. Reversing distrust is a pretty hard thing to do.

Just be forthcoming with the information now. Sooner would have been better. But, it is truly better late than never.

Yikes! I thought my comments on Alan's and Tom's posts would be short. Ah well, here you go:

Better orgs than the SSA have repeatedly fallen victim to system development cost overruns.

The fault lies not with the vendor, but with the org for not doing its homework. Orgs that caredfully manage their development project budgets almost always start with an outside consultant to establish requirements and objectives. The 10% they spend on total project costs up front will typically save 5 to 10 times that amount by the end of the project.

Most orgs don't fully understand what they want until well into development, when it starts getting expensive to deconstruct what's been done. That's why many developers are adopting iterative development strategies. Harder to sell since they are more expensive from the outset, but save the client money at completion. (Imagine saying, in a subtler way. 'Look friend, you're really not nearly as smart as you think you are. In fact, I suspect you don't even really know how your business works. Why don't you spend a few more bucks up front and we'll teach you about your business while building you a system that makes sense.' Automating processes requires unravelling their logic. Where there isn't any, then you have a new design chore to fulfill. The effect is cascading. That's why it is so critical to do your homework...

Asking SSA members to volunteer to do this type of work is unreasonable. Few have the expertise in all the needed areas, and assembling the expertise would be very difficult. The likely outcome would be a less costly system that did not meet its objectives.

Maintenance is typically 15% of product price (services not included). Enterprise maintenance contracts run closer to 20 to 25% of product price. If an org does not have a technical staff, maintenance will often include a fixed number of 'use or lose' monthly consultant hours. If you figure 20 per month at $150 per hour, you can see how the annual service contract can start going through the roof.

The SSA, though not rich, is probably a pretty easy sell. Since they are far from any substantial business center, I suspect it would be tough for them to get a reasonable sampling of vendors out to show off their wares. They probably could have found a cheaper system, but what sales team is going to make the trek out to Hobbs for a $50K sale?

I too felt like someone needed to lose his job over this. But if that were to happen in all such cases, I'd have no one left to do business with. Most people think such systems happen by Magic. Enough developers on this board to know that's not the case. It involves alot of hard work, and if the system is mission critical, add another 50% on top for business analysis, QA, testing, a development environment, a testing environment, and the production environment. And do you want documentation? And training? There's much more to business savvy than uderstanding your own business, though that's a pretty good first step. You need to understand your partner's business too. The SSA just didn't do its homework. But that just makes them members of a very large majority.

I was at Barnes and Noble a couple of weeks ago. That org has business modlers on staff! They contract them out to divisions with development needs. Very unusual. Very smart.

You Irish marsupials can really think out of the pouch.

I agree that it's time to get on with business, but the same business in the same way and place? The dues increase needed to pay for this will likely cost us members pushing us further to the margins of visibility and clout. What safeguards are in place to prevent a reoccurence of this sort of fiasco? Who takes responsibility and what are the consequences?

Raphael Warshaw Claremont, CA